Changing Your Pay Structure & The Cost of Total Rewards
Will you need a different budget due to changes in your pay structure? How do you set your budget for bonuses, benefits, or other total rewards?
Changing Your Pay Structure
With increased competition for talent and economic volatility, there is a trend towards more frequently changing pay structures. According to the WorldatWork, about two-thirds (67%) of organizations now adjust their pay structures annually. (WorldatWork Compensation Programs & Practices Survey, 2022)
Leveraging the culture work of Kevin Oakes – Founder & CEO, Institute for Corporate Productivity (i4cp) – when considering these initiatives ask yourself if your structures require rebuilding or renovation?
A renovation (adjusting the minimum, mid-point, and maximum of your salary ranges to adjust for market, for instance) will have a different impact on your budget than a complete rebuild. We recommend strategically timing these design projects so that your recommended structure and its cost-impact are known prior to entering budgeting season.
The Cost of Total Rewards
Base pay is often the focus of total rewards discussions. But other cash programs and rewards such as benefits, financial plans, and well-being programs play an important role in rewarding your employees in an equitable, competitive, and sustainable way. For instance, our research shows that the use of sign-on bonuses and other up-front incentives is becoming more prevalent.
Additionally, research shows that total rewards programs address different employee wants and needs. Establishing effective two-way communication with employees and managers will surface insights on candidate and employee drivers and motivations.
Once you understand what is wanted and valued, you can explore your options for optimizing your total rewards. Be intentional in examining what investment is required for healthcare, retirement programs, employee recognition, perks, mental health and other wellness programs. You won’t be able to fund everything, all the time, so time is required to establish your priorities and the budget necessary to drive the results you’re seeking.
Like this article? These questions, “Will you need a different budget due to changes in your pay structure?” and “How do you set your budget for bonuses, benefits, or other total rewards?” are just 2 of 10 critical questions you need to ask to help you with your 2023 compensation budget. To learn more about the other critical questions and how to address them, you can download our complete and complimentary report here:
